Creative Capitalism—A Commentary by Ian Ayres ’86

The following commentary was published in The New York Times on July 25, 2008.

Creative CapitalismBy Ian Ayres ’86

A speech that Bill Gates gave at Davos (and which Steve Levitt likes) is now being debated in an ongoing blog by an amazing cast of characters — including, to name a few, Lawrence Summers, Richard Posner, Michael Kinsley, Steven Landsburg, Michael Kremer, and Ed Glaeser. They are engaged in a lively discussion about whether corporate capitalism can be reinvented and reoriented with a combination of incentives and recognition to make progress on under-addressed social problems.

This is not a love fest for Gates and the potential millions that his foundation could bestow on academics, but a free-wheeling debate on whether our current corporate model is broken.

I’m impressed because it’s hard to disagree with potential funders.

Years ago when I was teaching at another university, I was invited to a special seminar presented by a multi-millionaire heir. The heir argued that the natural rate of interest was 5 percent because the natural life of a generation was 20 years and 5 percent is the reciprocal of 20. I’m pretty sure that this is nonsense on stilts. The audience (which included more than one Nobel prize winner) faced a real dilemma. Do you tell someone who could give you millions that he or she has a foolish idea?